The Herd Was Wrong On Nabors Industries

Nabors Industries Ltd. (NBR) announced that it expects Q4 results to be below current analysts' consensus estimates as a result of weaker-than-expected Lower 48 States and Canadian operations. The company currently estimates Q4 earnings to be in the range of $0.95 to $1.00 per diluted share, implying a full year 2006 estimate between $3.53 and $3.58 per diluted share.

Problems are occurring in Canada due to unseasonably warm weather which frustrates implementation as the ground is too soft to move the heavy equipment into place. Gene Isenberg, Nabors' Chairman and CEO, commented that the lower 48 also experienced some slippage in delivery of new rigs.

The month of December saw the stock drop from around $35 to $30. Institutions have been net sellers for the prior quarter lightening the load by about 8.6% of their holdings. Insiders have not purchased any stock in the past six months. Warm weather and lower heating fuel demand have been well-publicized stories.

So every other informed observer figured it out and took appropriate action. Analysts maintained higher estimates and missed it entirely. Of the over twenty analysts, not one was even close to calling it. In the past six months there was only one upgrade/downgrade, with RBC Capital Markets issuing an upgrade to sector out perform. The change came out mid December. The herd just missed it. Too bad for the investors and advisers who listened to these guys.

NBR 1-yr chart:

Comments

[Trading God...:]

Hello,

Mind you, I am a long, and have never shorted a stock. But, I did happen to mention NBR on my blog starting on December 06. In one of those comments, I mentioned I thought the stock could go as low as $25. Thanks for the article. :)

2007 Jan 03 11:08 AM

[David Love:]

I followed the herd. I saw the trend. I saw the upgrade. I elected to hold. I sold today.

2007 Jan 03 04:06 PM